Exxonmobil: Social Responsibility in a Commodity Market
ExxonMobil: Social Responsibility in a Commodity Market
Fall 2011
1. Consider and discuss the impact of the rising price of gasoline on as many other products and services as possible.
Drivers realize that the price of gas is tied to the market value of crude oil, and has a direct impact to their daily commutes, errands, and vacations. However the reality is that the price of fuel has implications much grater than most consumers realize. Fuel prices affect nearly everything we purchase. For example, the price of farm commodities and food increase because farmers pay more for the fuel for their farm equipment and trucking firms pay more for fuel to get the commodities to market. These shipping “fuel surcharges” impact all goods shipped by truck, and will raise retail prices over time.1 Beyond the distribution costs, high oil prices also impact the production costs of other products as well. Costs to make rubber, asphalt, and most plastics are escalated due to the rising cost of raw materials. The demand for “want” items will also shift as the price of gasoline rises or falls. This is due to the level of discretionary money consumers have to spend once their gas tanks are full. At times of high gasoline prices, these funds will be less and demand will diminish. If this situation continues for a period of time, it will contribute to the social dilemma of unemployment.
2. How does the information in this case relate to the common criticism that marketing causes prices to be higher than they normally would? From the Case’s content, there was no tangible data that criticized ExxonMobil for utilizing a marketing plan of product, place, or promotion to overinflate the price of the firm’s gasoline products. However, it’s known that the auto makers altered their marketing plans to highlight their smaller fuel conserving vehicles after a decade of promoting the larger SUVs and trucks. In conjunction with gas prices, the auto makers have been strongly
Fall 2011
1. Consider and discuss the impact of the rising price of gasoline on as many other products and services as possible.
Drivers realize that the price of gas is tied to the market value of crude oil, and has a direct impact to their daily commutes, errands, and vacations. However the reality is that the price of fuel has implications much grater than most consumers realize. Fuel prices affect nearly everything we purchase. For example, the price of farm commodities and food increase because farmers pay more for the fuel for their farm equipment and trucking firms pay more for fuel to get the commodities to market. These shipping “fuel surcharges” impact all goods shipped by truck, and will raise retail prices over time.1 Beyond the distribution costs, high oil prices also impact the production costs of other products as well. Costs to make rubber, asphalt, and most plastics are escalated due to the rising cost of raw materials. The demand for “want” items will also shift as the price of gasoline rises or falls. This is due to the level of discretionary money consumers have to spend once their gas tanks are full. At times of high gasoline prices, these funds will be less and demand will diminish. If this situation continues for a period of time, it will contribute to the social dilemma of unemployment.
2. How does the information in this case relate to the common criticism that marketing causes prices to be higher than they normally would? From the Case’s content, there was no tangible data that criticized ExxonMobil for utilizing a marketing plan of product, place, or promotion to overinflate the price of the firm’s gasoline products. However, it’s known that the auto makers altered their marketing plans to highlight their smaller fuel conserving vehicles after a decade of promoting the larger SUVs and trucks. In conjunction with gas prices, the auto makers have been strongly
References: 1: Author unknown, (2011, March 02). Impact of gasoline prices. Yuma Sun. Retrieved on October 07, 2011. http://www.yumasun.com/opinion/prices-68106-oil-impact.html 2: National Defense Council. (Date Unknown). US Gasoline usage. Gasoline usage [data file]. Retrieved on October 7, 2011. http://consumerenergyalliance.org/primary/education-research/reference-library/quick-facts-for-energy-consumers/gasoline-usage/